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Annual Leave Loading.

What is Annual Leave Loading?

Annual leave (also known as holiday pay) allows a part-time or full-time employee to be paid while having time off from work. The entitlement to annual leave comes from the National Employment Standards (NES).

Sometimes, the relevant Award or agreement will give the employee an additional leave loading, usually about 17.5% extra payment, when the employee takes their annual leave. If not, an employee will be paid at their base pay rate.

This leave loading condition is a common feature of Modern Awards. The source of entitlement to annual leave loading when an employee initiates on annual leave will correspond in the employee’s applicable relevant Award or agreement.

Except as otherwise provided by an industrial instrument, annual leave loading is payable on all accrued annual leave when taken by the employee and not only to the current year’s accrual.

Annual Leave Loading on Termination

If an employee is entitled to annual leave and annual leave loading, then he or she must be paid out for both entitlements if their employment is terminated.

This entitlement is based on the annual leave on termination provision of the Fair Work Act 2009 which provides that a terminated employee with a period of untaken annual leave must be paid what they would have been paid if they had taken that period of leave. This section is part of the National Employment Standards so it cannot be excluded by any term in a Modern Award, agreement, or other instru that may provide for a lesser benefit.

To work out exactly how much annual leave an employee is entitled to or if an employee is entitled to leave loading, please visit our Annual leave Guide,  check the relevant Award or speak with an Employsure specialist today on 1300 651 415.

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